Don’t Let Puerto Rico Fall Into an Economic Abyss

In a New York Times op-ed, Rhodium's Trevor Houser and Climate Impact Lab co-director Solomon Hsiang estimate the cost of Hurricane Maria to the Puerto Rican economy.

They highlight the importance of a large, timely, sustained and well-designed disaster relief aid package in mitigating the damage. Their research finds that in just 12 hours, Maria may have set Puerto Rico back by 26 years.

Hurricane Maria was an absolute monster. According to their calculation, the average exposure in Puerto Rico was winds of 123 miles per hour. Normally, only small areas get slammed, and indeed some locations suffered through Category 5 winds of 158 m.p.h. But what stands out about Maria is that if you were anywhere in Puerto Rico on Sept. 20, you would have been experiencing something that felt like passing through a strong Category 3 hurricane. There was nowhere to hide.

In the analysis, they used an econometric model of the costs of cyclones over the past 60 years and applied it to the characteristics of Hurricane Maria and the pre-storm economic conditions in Puerto Rico. They calculated that Maria could lower Puerto Rican incomes by 21 percent over the next 15 years — a cumulative $180 billion in lost economic output. Supposing that Puerto Rico had been on track to sustain its 0.8 percent real per capita annual growth between 2009 and 2015, then we would expect to see Maria undo all those gains and then some. It could now take 26 years for the next generation to get back to where we are today, assuming that per capita growth rate would have continued.

A more detailed discussion of the analysis is available on the Climate Impact Lab web site here.